Compare and contrast India’s crypto-asset policy and OECD’s Crypto-Asset Reporting Framework. How can India’s domestic crypto policy be improved?
The Organization for Economic Co-operation and Development (OECD) has finalized the framework for cross-border reporting for cryptocurrency.
This has emphasized on the need for India to finalize its draft for regulations of Cryptocurrencies. The government needs to draft a comprehensive regulatory and taxation framework for crypto assets, taking into consideration the OECD’s framework.
OECD’s framework on Crypto assets:
- The G20 has recommended the OECD to create a framework for the automated exchange of data on crypto assets among nations for transparency and tax compliance.
- In its response, the OECD has launched a framework for reporting and information sharing about crypto-assets, called the Crypto-Asset Reporting Framework (CARF).
- The CARF will focus on cryptographically-secured distributed ledger transactions.
- Those digital assets that are covered under standard reporting are excluded from CARF.
- Also, the assets that cannot be used for investment or payment purposes are also excluded.
- CARF will reduce the anonymity and opacity of crypto transactions.
Need for framework policy policy in India:
- As India is rapidly moving towards digitisation, there is an immediate need for a regulatory framework to govern the crypto assets market.
- The absence of a regulatory framework creates uncertainties for businesses and increases the risk of frauds.
- An unregulated ecosystem can also facilitate money laundering, fraud and terror financing.
- India is a signatory to the multilateral competent authority agreement on automatic exchange of financial account information. Hence, India is bound to comply with the required framework.
Way forward:
With the OECD’s finalization of CARF, India has an opportunity to frame regulations now, considering the reporting guidelines of the CARF.
Originally written on
March 6, 2024
and last modified on
October 27, 2024.